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ACA Repeal Moves Forward as House Republicans Unveil Their Health Care Replacement Plan

March 14, 2017

Late in the evening of March 6, House Republican leadership presented the American Health Care Act (AHCA) as its vehicle by which the Obama-era Affordable Care Act (ACA) would be repealed and replaced.

The plan received the support of the Trump administration but quickly drew criticism from both Democrats and budget-conscious conservative Republicans. Democrats have criticized the plan for pulling back much of the ACA’s Medicaid expansion, a move they say will ultimately leave millions of previously insured Americans without health care.

Conversely, "budget hawk" Republicans have found fault with the expensive provisions permitted in the bill as it also repeals many of the ACA-imposed taxes that were used to fund these provisions. However, the bipartisan Congressional Budget Office has estimated that the AHCA would cut the deficit by $337 billion over 10 years, primarily because of cuts to private insurance subsidies and Medicaid. The CBO estimates that these cuts will result in an increase of 14 million newly uninsured people by 2018, with that number rising to 24 million by 2026.

Some major health care groups—the American Hospital Association, American Medical Association, Association of American Medical Colleges, and AARP, along with numerous other smaller health care associations—have declined to support the bill as currently written.   

From the higher education perspective, the AHCA includes both positive and negative elements. Many institutions were hoping for repeal of the widely unpopular "Cadillac tax" imposed on health care plans with high premiums, currently set to take effect in 2018. The tax was not repealed by the AHCA, although its implementation was further postponed until 2025. The popular ACA provision allowing an individual to remain on their parents’ health care plan until the age of 26, well past the window of an undergraduate career for many students, also remains in the AHCA.

Additionally, a proposed retroactive provision would negate penalties associated with the employer shared responsibility requirement, the so-called "employer mandate," reaching back to related employer-incurred taxes since January 1, 2016. The bill would also allow individuals to make greater contributions to both health savings and flexible spending accounts, and would allow greater use of both for over-the-counter items starting in 2018. While the idea was also discussed to change the current tax treatment of employer-sponsored health care coverage in the bill, its treatment currently remains the same.      

While the AHCA has currently been approved on party lines by both the House Ways and Means Committee and the Energy and Commerce Committee, it still needs to be cleared by the House Budget Committee and the Rules Committee before it can reach the House floor for a full vote. Upon passage in the House, the legislation will move to the Senate for further action. Few in Washington expect a final version of the legislation to be passed without substantive revisions.

Contact

Megan Schneider
Assistant Director, Federal Affairs
202.861.2547
E-mail

Mary Bachinger
Director, Tax Policy
202.861.2581
E-mail